Gender equality: the European map of new rules for companies (We Wealth, 9 December 2022 – Stefania Raviele)

We Wealth with the support of Chiara Torino (partner of Toffoletto De Luca Tamajo) and Stefania Raviele (salary partner of De Luca & Partners) has developed the European map of gender equality regulations. Here are the new rules for listed and unlisted companies, from women at the top to the gender pay gap.

The European directive ‘Women on boards’ requires that at least 40% of non-executive director positions in listed companies are occupied by members of the underrepresented sex by 2026

In Norway, the Norwegian Gender Equality Act No 45 of 9 June 1978 introduced a requirement that women should represent 40% of the members of boards of directors of listed companies, under penalty of dissolution of the company.

In France, companies with at least 50 employees are required annually to comply with the obligations to record and report the gender pay gap taking into account the average salary.

On 22 November 2022, the European Parliament approved the ‘Women on boards’ directive on gender quotas on boards. This is what Chiara Torino, partner of Toffoletto De Luca Tamajo, defines as the ‘first real central intervention on the subject of gender balance’. But that is within the context of an extremely varied legal framework previously existing within the EU member states. Here is what changes for companies. And what other rules to consider, country by country.

‘The European Union’s commitment to gender equality goes back a long way’, says Stefania Raviele, salary partner at De Luca & Partners. ‘The principle of equal pay for men and women appears as early as 1957 in the Treaty of Rome; as well as in the European Social Charter of Turin of 1961, in the Maastricht Treaty of 1992 and in that of Amsterdam of 1997. In the Charter of Fundamental Rights of the European Union of Nice of 2000 the prohibition of all forms of discrimination based on sex is then reaffirmed and with the entry into force of the Treaty of Lisbon, which took place on 1 December 2009, equality between women and men was formally recognised among the founding values of the European Union (it is in fact established by Article 2 of the Treaty on European Union)’.  

Over the years, continues Raviele, there have been several regulatory initiatives at Community level. Among the most relevant are Directive 2006/54/EC on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation together with Directive 2019/1158/EU on work-life balance for parents and carers. This culminates in the European Union Gender Equality Strategy 2020-2025, also referred to as the Union of Equality. ‘The objectives it sets itself are many: from the fight against gender violence to that of the gender pay gap, from the elimination of sexist stereotypes to gender balance in politics’, explains Raviele. ‘Among the first outcomes of the strategy, on 4 March 2021 the Commission proposed binding measures for pay transparency and on 17 October 2022, the European Council gave the green light to the directive promoting more balanced gender representation on the boards of listed companies.’

Women on boards: the new EU directive provisions

The directive, which was also definitively adopted by the EU Parliament the following month as noted above, provides that at least 40% of non-executive director positions in listed companies must be occupied by members of the underrepresented sex by 2026. If Member States choose to apply the new rules to executive and non-executive directors, the target drops to 33% of all director posts by 2026. ‘The directive stipulates that listed companies that do not meet these objectives will have to adapt their selection process’, warns Raviele. ‘They will have to put in place fair and transparent selection and appointment procedures, based on a comparative assessment of different candidates on the basis of clear and neutrally formulated criteria. This means that when companies have to choose between like-qualified candidates, they should prioritise the candidate of the underrepresented sex.’

The measure also imposes on the companies concerned ‘the obligation to provide information annually (to be published also on company websites) to the national authorities regarding gender representation on their boards, as well as on the achievement of the minimum objectives prescribed by the measure’, adds Torino. States will in turn ‘publish and update a list of listed companies that have complied with the Directive’s requirements’ and must ‘put in place administrative or judicial procedures that make it possible to enforce compliance with the Directive’s obligations as well as effective, dissuasive and proportionate sanctions in the event of breaches (such as fines or annulment in court of appointments that do not comply with the new procedural obligations)’, clarified Torino. Micro, small and medium-sized enterprises employing fewer than 250 people, whose annual turnover does not exceed EUR 50 million or whose annual balance sheet total does not exceed EUR 43 million are excluded.

The full version can be accessed at We Wealth.